Analyzing Prime Meridian (OTCMKTS:PMHG) & Community Trust Bancorp (NASDAQ:CTBI)

Prime Meridian (OTCMKTS:PMHG) and Community Trust Bancorp (NASDAQ:CTBI) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, profitability, institutional ownership, risk and valuation.

Dividends

Prime Meridian pays an annual dividend of $1.00 per share and has a dividend yield of 1.9%. Community Trust Bancorp pays an annual dividend of $2.12 per share and has a dividend yield of 3.8%. Prime Meridian pays out 40.3% of its earnings in the form of a dividend. Community Trust Bancorp pays out 41.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Community Trust Bancorp has increased its dividend for 44 consecutive years. Community Trust Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Prime Meridian has a beta of 0.17, suggesting that its share price is 83% less volatile than the S&P 500. Comparatively, Community Trust Bancorp has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Prime Meridian and Community Trust Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prime Meridian	0	0	0	0	0.00
Community Trust Bancorp	0	0	3	0	3.00

Community Trust Bancorp has a consensus target price of $64.50, indicating a potential upside of 16.78%. Given Community Trust Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe Community Trust Bancorp is more favorable than Prime Meridian.

Earnings and Valuation

This table compares Prime Meridian and Community Trust Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prime Meridian	$50.36 million	3.47	$8.49 million	$2.48	20.87
Community Trust Bancorp	$376.01 million	2.66	$82.81 million	$5.08	10.87

Community Trust Bancorp has higher revenue and earnings than Prime Meridian. Community Trust Bancorp is trading at a lower price-to-earnings ratio than Prime Meridian, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

11.8% of Prime Meridian shares are owned by institutional investors. Comparatively, 60.2% of Community Trust Bancorp shares are owned by institutional investors. 25.9% of Prime Meridian shares are owned by insiders. Comparatively, 4.3% of Community Trust Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Prime Meridian and Community Trust Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Prime Meridian	15.55%	9.25%	0.87%
Community Trust Bancorp	23.33%	11.77%	1.47%

Summary

Community Trust Bancorp beats Prime Meridian on 13 of the 17 factors compared between the two stocks.

About Prime Meridian

Prime Meridian Holding Company operates as the bank holding company for Prime Meridian Bank that provides various consumer and commercial banking services to individuals and businesses. The company accepts various deposits, such as checking, money market, savings, term certificate of deposit, demand interest-bearing and noninterest-bearing, health savings, NOW, and escrow accounts, as well as retirement savings plans and time deposits. Its loan products include commercial real estate, residential real estate and home equity, small business administration, construction, equipment, and commercial loans; and consumer and other loans comprising financing of automobiles, boats, and recreational vehicles, as well as issues standby letters and business lines of credit. The company also offers debit and credit cards; mobile banking, remote and mobile deposit, Apple Pay, bank-to-bank transfer, and online banking services; and safe deposit, wire transfer, foreign exchange, direct deposits, notary, night depository, official checks, domestic collections, bank drafts, automated teller services, drive-in tellers, merchant card, and banking by mail services, as well as invests in securities. Prime Meridian Holding Company was founded in 2008 and is headquartered in Tallahassee, Florida.

About Community Trust Bancorp

Community Trust Bancorp, Inc. operates as the bank holding company for Community Trust Bank, Inc. that engages in the provision of commercial and personal banking, and trust and wealth management services to small and mid-sized communities in eastern, northeastern, central, and south-central Kentucky, as well as southern West Virginia, and northeastern Tennessee. The company accepts time and demand deposits, checking accounts, savings accounts and savings certificates, individual retirement accounts and Keogh plans, and money market accounts. Its loan portfolio includes commercial, construction, mortgage, and personal loans; lease-financing, lines of credit, revolving lines of credit, and term loans, as well as other specialized loans, including asset-based financing; residential and commercial real estate loans; and consumer loans. The company also provides cash management, renting safe deposit boxes, and funds transfer services; issues letters of credit; and acts as a trustee of personal trusts, executor of estates, trustee for employee benefit trusts, and paying agent for bond and stock issues, as well as an investment agent and depositor for securities. In addition, it offers securities brokerage services; debit cards; annuity and life insurance products; and repurchase agreements, as well as mobile, internet banking, and e-statement services. The company was founded in 1903 and is headquartered in Pikeville, Kentucky.